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Business Quebec Superior Court Rulings Tax

Decision may grant tax authorities with much leeway

Quebec Superior Court overturned a ruling that held that the investigative methods used by federal and provincial tax authorities to investigate corruption in the Quebec construction industry were “highly reprehensible,” paving the way for Canada Revenue Agency and Revenue Quebec to once again pursue tax evasion inquiries that were put on hold for the past two years.

In a series of concurrent decisions, Quebec Superior court Justice Daniel Payette held that the investigation conducted by tax authorities did not contravene the leading Supreme Court of Canada decision in R. v. Jarvis, [2002] 3 SCR 757, which draws a distinctions between civil tax audits and criminal tax investigations.…

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Business Quebec Quebec Court of Appeal Rulings Tax

Appeal court orders seized material to be sealed in Uber case

Nearly six months after 20 Revenue Quebec officials raided the Montreal offices of Uber Canada Inc. as part of a tax investigation, the popular ride-sharing service won a legal battle against the provincial taxman after the Quebec Court of Appeal overturned a lower court ruling and held that the seized evidence must be sealed.

The succinct 12-page ruling will likely pave the way for more applications for impoundment as the courts and tax authorities grapple with the challenges posed by e-commerce, disruptive business models, and technology, according to tax lawyers.

“The ruling demonstrates that the courts and tax authorities have no choice but to adapt to today’s technology,” noted Alexandre Dufresne, managing partner of Spiegel Sohmer in Montreal. …

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Accounting Business Quebec Quebec Court of Appeal Rulings Tax

Revenue Quebec ordered to pay $2.4 million

Revenue Quebec was ordered to pay $2.4 million, including $1 million in punitive damages, to a Montreal business after the Quebec Court of Appeal found that the provincial fiscal authority abused its powers and acted maliciously and in bad faith.

In a decision that sternly rebukes the provincial tax authority for abusing its “extraordinary powers,” the appeal court ruling held that Revenue Quebec owes a general duty of care and good faith to taxpayers as well as an “obligation to compensate” taxpayers who were the victims of wrongful conduct, according to tax lawyers.…

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Accounting Charter of Rights and Freedoms Court of Quebec Quebec Rulings Supreme Court of Canada Tax

Revenue Canada investigation highly reprehensible, says court

A “highly reprehensible” and illegal probe by the Canada Revenue Agency that failed to draw the distinction between a civil tax audit and a criminal tax investigation has put into jeopardy several tax evasion criminal cases involving Quebec construction companies and corruption charges against former federal civil servants, according to tax experts.

In a precedent-setting ruling that appears to bring more clarity to the leading Supreme Court of Canada decision in R. v. Jarvis , [2002] 3 SCR 757, Court of Quebec Justice Dominique Larochelle held that the evidence produced to charge the owner and three other company officials of a Montreal company, B.T. Céramiques, was obtained illegally because federal tax officials crossed the “Rubicon” and failed to inform the taxpayers that the inquiry had turned into a criminal investigation, thereby breaching their right to freedom from self-incrimination and right to reasonable expectation of privacy guaranteed under s.7 and s.8 of the Charter of Rights and Freedoms.…

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Accounting Business Quebec Tax

“Head of Quebec accounting firm calls for elimination of small business tax

The Quebec provincial government should follow Manitoba’s lead and eliminate the business tax for small and medium-sized business with net taxable earnings under $500,000 so long as they invest the amounts saved in employment, innovation, and production, suggested the head of a Montreal accounting firm at a tax conference.

The latest Quebec budget has put the province in a better position to grow and prosper by gradually lowering the general corporate tax rate but the provincial government should contemplate abolishing income tax for small businesses to stimulate the economy even more, said Emilio Imbriglio, the president and chief executive officer of Raymond Chabot Grant Thornton.…

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Accounting Business Corporate law Tax

OECD hopes reforms will end era of tax avoidance

An unprecedented international collaboration on tax reform that recently unveiled sweeping plans to crack down on aggressive tax planning by multinational companies has the potential of becoming the biggest shake-up in international tax rules in nearly a century, according to tax professionals.

Endorsed by G20 finance ministers and leaders, the ambitious proposals by the Paris-based Organisation for Economic Co-operation and Development (OECD) aims to close loopholes, increase transparency to assist tax authorities in risk assessments, and restrict the use of tax havens to curb many international tax planning strategies.

The plan, known as the Base Erosion and Profit Shifting (BEPS) project, lists 15 specific actions intended to establish coherent rules for corporate income taxation, prevent tax treaty abuse, tackle the tax challenged posed by the digital economy, and amend the world’s 3,000 bilateral tax treaties through a multilateral instrument.…

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Accounting Business Tax

Tax competition stirs controversy

Barely a month after the European Commission ruled that Starbucks Corp. and Fiat Chrysler Automobiles NV benefited from illegal tax deals from the Dutch and Luxembourg governments, cross-border tax avoidance will be the subject of yet more intense scrutiny after European Union lawmakers decided recently to quiz 11 multinational corporations over sweet-heart tax deals with governments.

While multinationals are under growing public criticism for using tax avoidance strategies such as assigning valuable patent rights to shell companies based in tax havens or receiving interest deductions for payments made to their own subsidiaries, tax competition too is responsible for the dire situation, said Peter Dietsch, author “Catching Capital – The Ethics of Tax Competition.”…

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Accounting Business Quebec Tax

Ombudsman comes down hard on Revenue Quebec

A blistering report by Quebec ombudsman recently accused Revenue Quebec of becoming more intransigent and less respectful report towards taxpayers, prompting an immediate reaction from the provincial finance minister who ordered the tax department to come up with a “concrete action plan” to remedy the “unacceptable” situation.

Revenue Quebec “frequently failed” to apply the principles of natural justice or the fundamental rules of procedural fairness while recovering tax dollars, rigidly interpreted fiscal laws which often resulted in needless court action to resolve tax disputes with taxpayers, and “employed inadequate, and even abusive,” auditing methods, according to the latest report by the Protecteur du citoyen, the second year in a row that the taxman was castigated by the ombudsman.…

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Accounting Business Tax

OECD report recommends giving tax authorities access to suspicious transaction reports

An international think tank is calling for tax administrations to have the fullest possible access to suspicious transaction reports received by financial intelligence units to ensure tax compliance and to tackle serious crimes as tax evasion, bribery, corruption, money laundering and terrorism financing.

The Paris-based Organisation for Economic Co-operation and Development (OECD) is calling on jurisdictions to provide the legislative framework to allow tax administrations to suspicious transaction reports (STRs) and to ensure that operational structures and procedures are put in place to facilitate the “maximum effectiveness” in the use of STRs.…

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Accounting Business Financial services Quebec Quebec Court of Appeal Rulings Tax

Quebec appeal court imposes duty to investigate on business seeking input tax credits

Less than a year after the Federal Court of Appeal held that a supplier’s delinquent fiscal conduct is irrelevant to an input tax credit claim, the Quebec Court of Appeal has muddied the legal waters with a controversial decision that affirmed that Quebec business are expected as part of an effort to impede tax evasion to conduct due diligence on suppliers in order to be able to obtain input tax credits.

In a highly-awaited ruling that startled tax professionals, the appeal court held that business are required to do more than simply confirm the validity of a supplier’s GST/HST registration number and confirm that invoices conform to the current legislation and regulations to qualify for input tax credit (ITC) claims. Business have the added duty to authenticate invoices used to claim ITCs originate from the person that actually performed the service, held the appeal court.

“This is a very important ruling for the business and tax world because in a way it can change the way businesses operate in Quebec,” remarked Alexandre Dufresne, a tax lawyer and managing partner of Spiegel Sohmer in Montreal. …

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